Property Transfers Among Family Members Do Not Negate Innocent Party Status For Remediation Funding Grants

October 26, 2017 | No Comments
Posted by Steven M. Dalton

The cost to remediate contaminated sites can be significant and the scope of liability under environmental laws is deliberately broad.  In many cases under theories of strict, joint and several liability, property owners inherit liability for environmental contamination caused by predecessor owners.  The affirmative innocent purchaser defense is intended to provide a mechanism to limit such liability exposure.  However, under New Jersey law, innocent purchasers must complete all appropriate inquiry prior to property acquisition and complete remediation of known contamination to limit liability exposure with respect to later discovered environmental conditions.  Funding from the State may be an option in some cases to assist persons who qualify as innocent parties in completion of remediation activities.  The Hazardous Discharge Site Remediation Fund Innocent Party Grant is available to persons who acquire property prior to December 31, 1983, who continue to own that property until grant monies are released to them, and who did not cause the environmental condition or use the types of substances that require remediation.

The recent case of Cedar Knolls 2006, LLC v. NJDEP addressed the question of whether intrafamilial transfers occurring after 1983 negate the ability to qualify for innocent party grant funding for remediation. The Appellate Division held that the transfer of property among family members prior to distribution of the grant monies and after 1983 did not negate the ability of the applicant to qualify as an innocent party for purposes of an innocent party grant. Read more


Appellate Division Reaffirms Position that Pinelands Protection Act Supersedes the Municipal Land Use Law

October 18, 2017 | No Comments
Posted by Steven W. Ward

In a recent unpublished decision, Peg Leg Webb, LLC v. New Jersey Pinelands Commission, A-4016-15T4 (Unpub. App. Div. October 11, 2017), a panel of the Superior Court of New Jersey, Appellate Division, reaffirmed that the Pinelands Protection Act (Act), as well as any regulations or authorities promulgated thereto, supersede any authority vested under the municipalities by the Municipal Land Use Law (MLUL).  Specifically, the court found that the Comprehensive Management Plan (CMP), adopted by the Pinelands Commission (Commission), supersedes a land use approval issued by a municipal planning board.

In this case, the Commission recommended that certain property in Jackson Township (Township) be rezoned from Rural Development (RD) to Forest Area (FA), which rezoning was subsequently adopted in 2005.  The Township’s rezoning was challenged and the trial court invalidated the rezoning for lack of proper procedure.  In 2012, the petitioner obtained preliminary site plan approval for a resource extraction facility from the Township’s Planning Board, which assumed the property was still zoned RD.  Importantly, resource extraction was a permitted conditional use in the RD zone, but not permitted within the FA zone.  The approval was examined by the Commission, which “called up” the approval for review.  After a hearing before an Administrative Law Judge (ALJ), the Commission adopted the ALJ’s decision, which held that the trial court’s invalidation of the municipal rezoning “did not change the designation of the subject property from RD to FA on the CMP’s land capability map.” (See p. 8).  Further, the Commission’s opinion found that the invalidation of the rezoning placed the municipality out of compliance with the CMP and the Township should have either passed another ordinance, or in the alternative, applied to the Commission for certification of the prior ordinance.  Accordingly, the Commission held that the approval was properly “called up” by the Commission.

The petitioner appealed the Commission’s decision to the Superior Court of New Jersey, Appellate Division.  In its decision, the court reaffirmed the legal precedent that “the Act and the regulations promulgated under it supersede the MLUL.” (See p. 11).  In doing so, the court found that “the ordinance was not in compliance with the CMP, and the CMP trumps the ordinance.” (See p. 11).


New Jersey Supreme Court: State Not Liable under Spill Act for Pre-1977 Discharges

March 29, 2017 | No Comments
Posted by Melissa A. Clarke

New Jersey’s Supreme Court ruled this week that the State cannot be held liable for pollution discharges that occurred prior to the adoption of the New Jersey Spill Compensation and Control Act (Spill Act).

The case involves a Superfund Site in Laurence Harbor.  The State had granted approval in the 1960s for construction of a seawall and beach restoration, partially on State land, using metal slag.  In 2007, contamination was discovered along the seawall, and ultimately the U.S. Environmental Protection Agency (USEPA) identified the Laurence Harbor site as a Superfund Site.  USEPA demanded NL Industries, the company which had provided the slag, clean up the site.  NL subsequently filed a contribution claim in state court seeking New Jersey’s share of cleanup costs.  The trial court decided in favor of NL, since the State is included in the Spill Act’s definition of a “person” subject to the Act, and the appellate court agreed.

In its decision, the Supreme Court concluded that “the Spill Act contains no clear expression of a legislative intent to waive the State’s sovereign immunity retroactively to cover periods of State activity prior to the Spill Act’s enactment.”  Thus, barring any future amendment to the Spill Act to address this issue, the State of New Jersey may face liability only for discharges occurring after the Spill Act’s 1977 effective date.


Applying Equitable Principles, New Jersey Appellate Division Expands Spill Act Liability

March 22, 2017 | No Comments
Posted by Melissa A. Clarke

The New Jersey Appellate Division recently construed the Spill Compensation and Control Act (the Spill Act) as permitting a property owner to compel neighboring owners to share in the costs of an investigation into the cause of and responsibility for contamination without first establishing the neighbors contributed to the contamination. This decision is significant, as prevailing Spill Act case law requires a plaintiff seeking contribution to first establish a nexus between the defendant and the contamination at issue.

In its published decision, the Appellate Division stated that it does “not interpret the Spill Act as being so narrow or ineffectual as to permit a private action only on proof that another caused contamination in whole or in part.”  The Appellate Division upheld the Chancery Division’s authority to issue a judgment compelling the other owners’ cooperation in the further investigation of the property, reasoning that a denial of that equitable remedy would “preclude or render unduly burdensome a greater examination into the situation” and would not be “in the best interest of the health, safety and welfare of the people[.]”

Thus under some circumstances, New Jersey courts may be willing to permit a suit requiring the cooperation and involvement of other alleged contaminators into an investigation where there is not yet any evidence as to the precise source of the contamination.


Court Defines Time of Application Trigger

February 15, 2017 | No Comments
Posted by Paul H. Schneider

A February 14, 2017 decision of the Appellate Division of New Jersey Superior Court may make it more difficult for developers to gain the benefit of the “time of application” rule enacted by the Legislature in 2011. Prior to that, courts in New Jersey applied the “time of decision” rule, under which a decision concerning a municipal land use application was based on the municipal ordinance as it existed at the time the application or appeal was decided. The time of decision rule allowed municipalities to block proposed developments by changing the applicable zoning ordinance while development applications were pending. Then the Legislature put an end to this unfair practice by amending the Municipal Land Use Law (MLUL) to provide that “those development regulations which are in effect on the date of submission of an application for development shall govern the review of that application for development and any decision made with regard to that application …” N.J.S.A. 40:55D-10.5. This time of application rule has been of considerable assistance to property owners and developers by preventing municipalities from blocking development with eleventh hour changes to zoning ordinances after the developer has spent time and money pursuing a lengthy and costly application process. Read more


New Jersey Supreme Court: Insurers May Be Liable for Cleanups Even After Policy Assignment

February 6, 2017 | No Comments
Posted by Melissa A. Clarke

On February 1, 2017, the New Jersey Supreme Court unanimously held that insurers may remain liable for cleaning up pollution even if the original insurance policy has been assigned due to corporate mergers or restructuring of the insured.

In a decision that directly impacts many New Jersey policyholders and insurance companies, the Court confirmed that “no assignment” clauses are intended to prevent policy assignments during the policy period that increase risk to the insurance company.  In the case at hand, the insured loss (environmental contamination) occurred during the policy period and prior to assignment.  Because the policies at issue were assigned after the policies expired and after the loss, only the right to coverage for the already-occurred loss was assigned.  As a result, the Court concluded that the assignment had not increased the risk to the insurer, and the “no assignment” clause did not apply.

Thus, regardless of any anti-assignment clause in an occurrence policy, post-loss assignment of an insurance policy will not alter an insurer’s liability for a cleanup.


The New Jersey Supreme Court Issues Its Gap Period Decision

January 18, 2017 | No Comments
Posted by Donna A. McBarron

On January 18, 2017, the New Jersey Supreme Court held that municipalities do have an obligation to satisfy the unmet affordable housing obligations arising from 1999 through 2015, the so-called “gap period.”   In a decision that will be hailed as a victory for affordable housing advocates and developers, and a loss for municipalities, the Court held that “the need of presently existing low- and moderate-income households formed during the gap period must be captured and included in setting affordable housing obligations for towns. . . .”  This need will be captured in a redefined “present need,” which previously only included the calculation of overcrowded and deficient housing units.   Thus, the affordable housing units which were lost during the period of time in which COAH failed to deliver a workable set of regulations will not be forever lost.  Once again, the Court welcomed legislative or executive action. Unless and until that happens, the gap period will need to be addressed in a municipal affordable housing plan.


COURT REJECTS AUTOMATIC APPLICATION OF “TIME OF FILING” RULE IN BUILDER’S REMEDY LITIGATION

December 15, 2016 | No Comments
Posted by Paul H. Schneider

Developers who bring builder’s remedy lawsuits under New Jersey’s Mount Laurel doctrine often cite the so-called “time of filing” rule.  The contention is that in determining whether a municipality is compliant with its affordable housing obligations, the court must base its decision on the zoning ordinances in effect at the time the developer initially filed its lawsuit, and disregard actions the municipality may have taken to achieve compliance after the lawsuit was filed.  The time of filing rule finds support in earlier cases such as Toll Brothers, Inc. vs. Township of West Windsor, and Mt. Olive Complex v. Township of Mt. Olive.

In a December 14, 2016 decision, the Appellate Division of Superior Court rejected the automatic application of the time of filing rule.  In Hollyview Development Corporation I vs. Township of Upper Deerfield, the developer filed its lawsuit in 1998.  For several years, Hollyview did little to actively pursue the case.  In 2013, Hollyview filed a motion for summary judgment, relying, in part, on the claim that the Township was not compliant with its affordable housing obligations back in 1998, when the case was filed.  The Township claimed that in deciding the motion, the court should consider what the Township had done in the interim to provide affordable housing.  Hollyview was unable to show that the Township had taken these actions as a result of Hollyview’s lawsuit. Read more


APPELLATE DIVISION SENDS PIPELINE CASE BACK TO PINELANDS COMMISSION FOR FURTHER REVIEW

November 7, 2016 | No Comments
Posted by Paul H. Schneider

In a setback to plans by the South Jersey Gas Company (SJG) to construct a natural gas pipeline through the Pinelands, the Appellate Division of Superior Court rejected a decision by the Executive Director of the Pinelands Commission that would have permitted construction of the pipeline without review by the full Commission.

Because the proposed pipeline will travel through several municipalities in the Pinelands, it is subject to review for consistency with the minimum standards of the Pinelands Comprehensive Management Plan (CMP). Initially, the Commission’s staff found that the pipeline did not satisfy those standards as it was not intended to primarily serve only the needs of the Pinelands Area. The Commission’s staff and the staff of the Board of Public Utilities (BPU) then negotiated a Memorandum of Agreement (MOA) to allow the project to be built in the Pinelands Area notwithstanding the finding that it did not comply with the minimum standards of the CMP. However, when presented to the full Commission, the MOA failed to garner a majority vote. Read more


The Highest and Best Use Valuation for Property – The Synergy Between the Condemnation Award and the Escrow Amount

October 26, 2016 | No Comments
Posted by Connor E. Phalon

The Appellate Division of Superior Court recently published a decision providing further clarification of the seminal New Jersey Supreme Court condemnation case Housing Authority v. Suydam Investors, L.L.C. By way of background, in Suydam, the Court held that a condemned contaminated property should be valued “as if remediated” rather than “as is” when determining the condemnation award. In reaching this conclusion, the Court recognized that the valuation inquiry should not be limited to the actual use of the property, which would inherently be circumscribed by its contaminated status, but instead should rely on the property’s highest and best use. The Court emphasized, however, that an “as if remediated” valuation was an “enhanced value,” which included the estimated transactional costs associated with the remediation of the property to achieve its highest and best use. And in order to ensure that parties are not provided an unfair windfall through this form of valuation, the Court in Suydam opined that the condemnor may seek an order requiring such estimated transactional costs to be set aside in escrow to satisfy the condemnee’s clean-up and transfer obligations. Read more